The latest from DTC Perspectives

Sick Economy, Sick Healthcare

The Wall Street Journal did a front-page story Monday on cutbacks in consumer health spending. The number of prescriptions filled fell 2% in the second quarter, along with a 1% decline in physician visits. The Journal cited a survey that indicated economic concerns are leading 22% of consumers to say they will visit doctors less often. The same survey said 11% said they will use less Rx drugs

This data is not surprising given the continuing shift of rising health care expenses from employer to employee. Consumers are spending more on healthcare as a percent of income. The real fear of additional economic declines are rationally causing consumers to be more careful about expenditures.

What does this mean for drug marketing? First, branded drugs will need to clearly justify the price premium over generics. This has always been the case but consumers will increasingly challenge physicians to prescribe a cheaper drug. Every business is being squeezed for profits, so employers will also demand better deals for branded drugs. The pressures on drug companies to lower price will be intense.

Second, there is no doubt that drug marketing budgets will be cut. This includes all areas of marketing, including DTC. As I said last week, I do not think the cuts will be dramatic but will be significant. Therefore, marketers will be called on to drill deeper into alternatives that increase ROI. All media suppliers will be asked to prove their worth. Drug marketers will take fewer chances on unproven tactics and that may hurt new media companies trying to establish a foothold. I do not see a major shift in media allocations, but there will be more pressure on mass media to prove their network or title is better than direct competitors. That calls for a knowledgeable sales force to defend the merits of a particular media company.

Third, this is probably not a fun time to be a DTC marketer. Management will be increasingly skeptical of increased DTC investment and demand re-justification for DTC. That is never an enjoyable experience. DTC marketers may grow restless and find other industries to use their skills. I do fear a brain drain of experienced people out of DTC. We are at a time where experience is critical to spend more wisely. This brain drain may also affect agencies that are being squeezed by drug companies to do more with less.

The general financial malaise and daily gyrations on Wall Street clearly are impacting Main Street . Unfortunately health care is often viewed by consumers as a discretionary expenditure, particularly for preventive care and for chronic disease treatments. This is not good for society if people decide to not spend money to diagnose and treat non-symptomatic illnesses like high blood pressure and cholesterol. Hopefully all the negative economic factors will improve by late next year so we all can see a more normal business climate.